NRG Throws Debt Scare at Exelon (NRG, EXC, RRI)

NRG Energy, Inc. (NYSE:NRG) has sent a letter to Exelon Corporation (NYSE:EXC) calling on Exelon to withdraw is proposal to expand NRG’s board and to “pack” the board with Exelon picks at the next NRG annual meeting.

According to NRG, approving Exelon’s proposed changes “could trigger an acceleration of NRG’s approximately $8 billion of outstanding corporate-level debt which could have serious negative consequences for NRG and all of its stockholders.” NRG goes on to say that refinancing that much debt would be “prohibitively expensive” or “impossible.”

In a response to NRG, Exelon calls the NRG letter a “misstatement” of NRG’s debt instruments, then proceeds to school NRG on what NRG’s own debt requires. Ouch. Basically, Exelon denies that its takeover is a change of control in NRG, and would thus not trigger all the negative effects NRG outlined. NRG still hasn’t set a date for its 2009 annual meeting.

Both NRG and Exelon shares were down slightly in early trading today along with the broad market.  Reliant Energy Inc. (NYSE: RRI) is down 6% this morning at $3.30, although that tie to this may not be the direct reasoning.

Paul Ausick
March 27, 2009